“With the huge commitments made by both State and private stakeholders into infrastructure and transport linkages, hotel investors are keen to capitalize on the Vietnamese market,” said Mr. Adam Bury, Senior Vice President, Investment Sales, Asia Pacific, Hotels & Hospitality Group at JLL. “2016 saw record levels of hotel transactions, with the dollar value of deals completed during the year representing 83 per cent of those completed in Thailand, a market which is often perceived to be significantly larger and more liquid.”

“Vietnam is shedding its image as a destination that tourists only visit once, with the food scene, golf, and casinos being just some of the reasons for repeat visitation,” he went on. “Investments made in infrastructure and transport have opened up an array of coastal destinations beyond the long-standing hotspots of Da Nang-Hoi An and Nha Trang-Cam Ranh for investors to target.”

With the recent rebranding of Hoi An’s The Nam Hai, now under Four Seasons management, and a second Four Seasons in the early stages of development in Hanoi, it is clear that many large operators are also keen to take a slice of the ever-expanding market.

“We have seen an increasing number of internationally-branded hotels open in Vietnam over the past 24 months and expect further diversification of hotel management companies and brands in the market,” said Mr. Frank Sorgiovanni, Head of Research, Asia Pacific, at the JLL Hotels and Hospitality Group. “As observed elsewhere in Southeast Asia, we expect growth beyond international hotel brands. Homegrown hotel brands are likely to come to the forefront, particularly catering to domestic travelers. We’re seeing domestic hotel brands being established in Ho Chi Minh City and Hanoi in the budget and mid-scale segments and expect these chains to grow nationwide at a rapid pace.”

With a record 10 million international visitor arrivals in 2016 and 20 million targeted by 2020, Vietnam is set to generate $30 billion in tourism revenue by the end of the decade. Chinese arrivals saw massive growth in 2016, up more than 50 per cent against 2015, and Russian arrivals are also rebounding, increasing 60 per cent year-on-year this year as at April.

The dramatic rise in arrivals has gone hand-in-hand with significant infrastructure investment as Vietnam spends a greater amount of its GDP on infrastructure than any other Southeast Asian nation. The investment will lead to 2,000 km of new highways, urban railway lines in Hanoi and Ho Chi Minh City, and a slew of airport expansions and new builds. This is complimented by investments from both State and private airlines to expand and improve their fleets.

It is therefore unsurprising that investors and hotel operators alike are keen to commit to this high growth market.

“Hotel performance, particularly in Hanoi, has improved off the back of the massive industrial investment that has surrounded the city,” said Mr. Bury. “We’re seeing similar trends in Ho Chi Minh City, which is also benefiting from its position as the financial hub of the country. The medium-term fundamentals continue to look good for investors.”